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A Foolproof System Anyone Can Do

Rung One – 401(k) Optimize your employer’s matched contributions if available. Your 401(k) is a means to a rich end, provided that you make the investment effort. 

Rung Two – Debt If you still have lingering debt, check out my methods to paying it off quickly. 

Rung Three – Roth IRA Like your 401(k), you’re going to want to max it out as much as possible. The amount you are allowed to contribute goes up occasionally. Currently, you can contribute up to $6000 each year.

Rung Four – Max Out Your 401(k) Retirement savings are cost-effective, given that accounts like the 401(k) offer tax advantages. Before you invest anywhere else, make sure you make the most of these benefits. 

Rung Five – Other Investments This is where you diversify;  after you’ve surpassed the other rungs on the ladder, rung five allows you to use extra money for investing in mutual funds and other long-term options. 

Step #4: Automate your finances

At IWT, we’re big on automation, and with good reason. If you work a typical 9-to-5 and still want to have some decent family time or downtime, why on earth would you sacrifice part of that time to pay bills and do financial admin? 

Your time is valuable, and thanks to technological advancements, you get to keep more of that time for yourself. 

You can set up automated transfers for bill payments, savings, and investments. Then, after your auto-payments are deducted, you can spend the rest of your money guilt-free on whatever you want. Even items you might have previously considered splurge items. This is called a Conscious Spending Plan, and it will allow you more financial freedom than a budget ever will.

Pay yourself first. This means saving and investing before you go to Pottery Barn’s seasonal sale. 

Also, check out my free Ultimate Guide to Personal Finance, which will teach you more about saving and investing and help you to create your rich life.

Automating your finances in 12 minutes with Ramit Sethi

From setting the best bill dates to stress-free automation, this video is an oldie but goodie packed with steps to make saving second nature and bill payments a breeze. Watch it now.